As expected online furniture retailer Temple & Webster (TPW), which only listed on the ASX last December, had a rotten year to June 30, racking up a big loss, as forecast in the company’s prospectus.
But no one expected the loss estimate of $18.5 million to be more than doubled in the June 30 final figure of a rather large $44.4 million.
But then the company has been a loss-making basket case from soon after listing.
The company raised $61 million in the float, of just on a third, or $21 million was paid to early stage investors in the company, including co-founders Mark Coulter and Conrad Yiu’s ArdenPoint and major shareholder Macquarie Capital.
Temple & Webster listed last December at $1.10 a share – the ended at 18 cent yesterday, down 7.9%.
But that level was soon reached (19 cents actually) when the first signs of poor trading and rising losses emerged two months after floatation. The shares have basically gone nowhere since then.
But by February of this year, Temple & Webster revealed that first-half EBITDA losses had blown out from $3 million to $7.5 million after customer acquisition costs soared and warned that full-year losses would reach $14 million.
Since then the company’s trading position has worsened and the net loss of $44.4 million for the year to June 30 confirms the extent of the company’s problems, and attempts by a new look management to react to the costs and other problems.
The final figure included $19.4 million in write downs on online furniture retailers Milan Direct and Zizo, which were acquired for $26 million just before Temple & Webster initial public offer last December. That was a pretty clever move by the company.
The statutory loss also included IPO costs of $6.9 million and finance costs of $4.6 million.
The company, Australia’s largest online furniture and homewares retailer, reported a proforma loss of $14.8 million before interest tax depreciation and amortisation, within its revised guidance but almost twice the proforma EBITDA loss of $8.5 million in the prospectus.
Proforma revenues rose just 3% to $61.7 million, compared with a prospectus forecast of $65 million as the number of active customers stagnated around 180,000.
The company has cash of $18.4 million and no borrowings.
And surprise, surprise, Temple and Webster has decided being a pure online retailer is too hard.
So it has opened a bricks and mortar outlet in Melbourne (a Milan Direct pop-up showroom) and plans to open a Temple and Webster store in Sydney in the second half of next year – the aim is to give possible buyers the chance to feel and see the company’s furniture and other product lines.
The means it is venturing into the realm of the mostly bricks-and-mortar furniture rivals such as Harvey Norman, Nick Scali, Fantastic and Freedom.
The continuing problems saw management change in March with the chief financial officer Deborah Kelly leaving and company co-founder and chief executive officer Brian Shanahan quitting in April.
Temple & Webster’s other co-founder Mark Coulter returned as interim chief executive in April and oversaw job cuts, the relaunch of the T&W’s website and an overhaul of marketing spend and strategy. Over the past few months operating costs have been cut by 20% and with market spending slashed, closed two warehouses and merged some of its online stores.
Mr Coulter said the company was well resourced, had no debt and was in a good financial position to move towards profitability with the goal of breaking even in 2018. That is a long way away.
